Sustainability Disclosure Requirements framework
Published in October 2021, the government’s policy paper Green Finance: A Road map to sustainable investing focused on ensuring there is a flow of decision-useful information on environmental sustainability from corporates to financial market participants. The report is part of the government’s plan for the UK to lead the world in green finance and sustainable investing.
Central to this are new economy-wide Sustainability Disclosure Requirements (SDR) that bring together new and existing sustainability reporting requirements for business, the financial sector and investment products. SDR will create an integrated framework for decision-useful disclosures on sustainability across the economy building on leading global standards and best practice. This will allow sustainability information to flow from companies in the real economy to the financial sector and its financial products. That information will help empower investors and consumers to make financial decisions which align with their values.
This includes requiring every investment product to set out the environmental impact of the activities it finances and justify any sustainability claims it makes. Asset managers will also need to set out how they incorporate sustainability into their investment strategy to allow consumers to make informed judgements about the kind of firms they want to invest in.
The new SDR will ensure investors have the information they need to make informed decisions about where to put their money.
Click the button below to read more about the FCA’s consultation on SDR and investment labels and PIMFA’s response.
PIMFA is strongly supportive of the new economywide SDR that aim to provide an integrated framework to ensure consistent sustainability disclosures between corporates, financial services firms and investment products. We also support the regulator’s ambition to bring greater transparency, trust, and integrity to the sustainable investment landscape. While we agree with the intended purpose and spirit of the proposals contained in the FCA consultation paper on SDR and investment labels, it is our view that the implications of the proposed regulation for portfolio management services have not been taken fully into account.